ihda income calculator...• calculate the historical monthly income and use that number to project...

IHDA Income CalculatorInstruction Manual

How to Use the Income Calculator

The calculator uses a series of drop-downs and data fields to enterinformation. These fields must be used. No information (other than the Lender signature) can be handwritten.

The drop-down fields are found in the following sections:• Other Income and Frequency: Found in the Borrower, Co-Borrower sections of

the calculator

• Asset Type and Mortgagor fields: Found at the Asset Type section of thecalculator

• Months Worked field: Found at the self-employment section of the calculator

• County, # of family members, AMI Limit, Non/targeted area fields: Found at the household information section of the calculator

How To Navigate

• Income should only be for the• Borrower/Co-Borrower(s) who reside in the property AND• Borrower/Co-Borrower(s) who are on the Note and Mortgage

• Count income from all sources• Even if you’re not counting the income for underwriting purposes• This includes, but is not limited to: SSI, VA Benefits, Child Support, Unemployment, etc.

• Provide supporting documentation for all income sources

Questions? Email mortgage@ihda.org

General Guidelines

IHDA Income CalculatorBasic Calculations

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Enter the Gross Income and the Pay Date/Check Date in the appropriate fields

Many Borrowers will qualify under our income limits using this basic calculation alone

Sometimes this basic calculation will get you over IHDA’s limits

Basic Calculations

IHDA Income CalculatorOvertime, bonuses, and commissions

Overtime, Bonuses, Commission

When calculating income that includes • Bonus • Overtime • CommissionYou are allowed to average them IF the Borrower earned it the year prior.

A Written VOE has to be provided to support the Bonus, Overtime and Commission income used.

Averaging

• Obtain a Written VOE with OT, Bonus, Commission separated

• Enter the Total for OT, Bonus, Commission for current year & past year earned into the income calculator Take YTD OT and average with last year’s OT earnings (Example

$7,000 current OT and $2,000 OT in prior year)• Submit the WVOE and other supporting documentation in your

submission to IHDA.• YTD income calculation is now $84,197.26Note: If the borrower has not worked at their current job for the entire year, enter theactual start date and not the beginning of the year. If using an actual start date, this is to be confirmed with a WVOE.

Overtime, Bonuses, Commission

Basic CalculationsMonthly Income

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Unearned IncomeYou must calculate unearned income for every loan. Take the amount that borrower(s) have in all accounts including:• Savings• Checking• Money Market• Stocks, Bonds• Etc.

To calculate do the following:• Obtain information from section VI Asset section of the 1003. (If

you’re aware of other accounts not listed on the 1003 include those as well)

• Enter the information at the asset area• Subtract the cash need to close from section VII details of

transaction

The calculator will determine any interest income and compute the greater of:1. Actual Income from assets or the Passbook Rate2. Actual Income is the actual interest income earned on the prior year's federal tax return3. Passbook Rate interest income automatically calculates* If Total Calculated Assets are below $5,000 interest income is not counted. Even if calculated assets are below $5,000 you must enter data in that field

Basic CalculationsSelf-Employed Borrowers

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s• To determine the income of a self-employed borrower, average their income using

• Their most recent/current Federal income tax returns and• A signed year-to-date Profit and Loss (P&L) Statement for the current year.

• The P & L should state the gross income, the expenses and the year-to-date net income.

• Note: The Profit and Loss Statement may need to come from a third party if required for credit underwriting purposes or if requested by IHDA.

• Calculate the historical monthly income and use that number to project the income forward (multiply monthly average by 12).

• For self-employed borrowers, the income calculation allows for the exclusion of legitimate operating expenses.

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What you’ll need• Last year’s signed federal tax returns with all applicable schedules

• A signed YTD Profit & Loss statement• If you have not exceed the 1st quarter (March) of the current year, you can use the prior two years of federal tax returns• Otherwise use the past year and current YTD fields• If the Borrower just started the self-employment, then use the current YTD field only and project income forward. Note in

the comment section when the Borrower started the self-employment.

Notes• If the Borrower’s income from self-employment is minor or a secondary source of income, then a signed and dated profit and

loss from the Borrower will suffice.• If the borrower’s major source of income is through self-employment, then P&L must come from third party verification and

you may need to provide corporate tax return if warranted.

Basic CalculationsFinal Steps

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Enter the following:• County Name• Number of family members living in the home• Household income is Above or Below 80% AMI IHDA income limits• The property is in a Targeted or Non-targeted area• The Borrower is or is not taking the MCC

Note: The number of family members in the household must match the number of people listed in Name and Age section

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After completing the Household Information section ensure that the calculator states “Compliant”.

If the calculator states “Non-compliant,” do the following:• Verify that the data is entered correctly• Recalculate: The Borrower(s) may actually be over IHDA’s income limits

IHDA Income CalculatorSignature Section

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If the loan is under IHDA’s income limit and the calculator shows Compliant. The Lender must sign and date the income calculator. Any notes/comments on how income was calculated by the reviewer should be added.

Submit the signed (reviewer’s name can be typed in, e-signed, wet signature) original income calculator along with all supporting income documentation (check stubs, award letters, etc.) to IHDA after the loan closes.

Note: Before signing, double check that data was entered correctly and that you have calculated income from all sources.